Reality Check: The State Of Advertising And Wearables

While advertisers are eyeing the vast possibilities for location tracking, behavioral targeting and interest discovery associated with wearables and Internet of Things (IoT) devices, the intimate nature of such devices creates consumer privacy concerns.

Despite the opportunity around wearables, it might behoove advertisers and agencies to temper their excitement a little.

“Wearables will generally be perceived as ‘niche’ and, therefore, gaining yet another share of digital or even TV budgets is less likely to go toward this,” said Carat global digital partner Lucy Barbor. At the same time, she warned that advertisers shouldn’t ignore them either.

“Wearables risk being viewed as gimmicky, though the iWatch might tackle this,” she said. “As such, brands risk not investing and therein, being left behind and failing to keep up at the point of critical mass penetration.”

AdExchanger asked at a handful of media agency executives to predict what type of data might be valuable for advertisers coming from a wearable or an IoT device.

In a year, what kinds of addressable advertising opportunities will the industry achieve through wearables and the IoT?

Wearable devices take behavioral triggers to the next level. With location-aware mobile devices, we can target people when they enter certain geographical zones. This enables us to quantify real-world actions. For example, we can determine what proportion of people carried out a desired real-world action, such as entering a store, as a result of exposure to a brand message. Wearable devices are enabling us to gather more qualitative findings: sensors worn against the body measure movement, body temperature and blood pressure, which provide insight into how people reacted emotionally to a brand experience. This allows brands to trigger rewards based on these experiences.

Wearables promise to deliver personalized and value-driven brand experiences, based on your physical and emotional state. A Netflix and FitBit brand hack paused a program if the viewer fell asleep, providing an option to restart the program once they have woken up. You can imagine brands intercepting moments like this with tailored messaging, based on a person's mood or mindset. The exciting part is that we will be able to identify and isolate moments which were previously unavailable to us. The challenge will be how to scale such programs since high reach will require significant penetration of wearable devices.

Katie Atkinson, global partner, Carat

As far as I am aware, data from IoT devices is not yet in the mainstream although it could be being used at an individual brand level to cross-sell/upsell to existing consumers (e.g., Nike using its fuel band hardware and smartphone running app). At a basic level, the data could be used to add depth to auction-based digital advertising strategies for tech companies, retailers and pharmaceuticals (within the boundaries of legislation). For example, manufacturers of sleeping tablets may want to reach people who have logged insomnia on their sleep-tracking devices. In terms of adding value to sports sponsorship partnerships, companies could (with permission) trade personal data from famous athletes. I’m sure that many a football fan would find value in comparing their training data or NikeFuel points to Wayne Rooney’s.

Beyond this, the future is [abundant] with business applications far and above ad targeting. In terms of security, ECG readings measured through wearables can be used to authenticate an individual’s identity. This could have huge impact within the legal and financial worlds. Companies could use data from employee fitness trackers to inform their health insurance premiums. In the same manner, information from smart cars and home security systems could be used to calculate home and car insurance premiums on a personal level using far more accurate data than simple demo and geographics.

Michael Miraflor, VP, strategy director at Liquid, ZenithOptimedia

The current, nascent market for wearable devices outside of heath trackers consists primarily of wrist devices that are tethered to smartphones. The forthcoming Apple Watch is a key example of this, as a user cannot fully exploit its capabilities without being connected to an iOS device. That seems like a bit of a liability from a campaign perspective, but I actually think it offers a great canvas of opportunity for creative media planners. I'd like to think of wrist wearables as secondary screens for rich media smartphone campaigns. Most geosensitive apps currently either pull location data upon user interaction, or push data when a smartphone is most likely in a pocket or purse.

One example would be a smart watch sensing that you've completed a workout out via internal accelerometer, and having a sports drink brand pushing a small congratulatory message on the wearable, that upon interaction opens up a brand experience on the primary mobile device, complete with branded video content and a map of the closest retail location where you can redeem a special offer. It's really exciting to think of these opportunities with this new tool kit, and they are already available to tinker with for brands that are willing to explore how to make it work with Android Wear/Google Now, and Apple Watch in the near future.

The No. 1 reason consumers use health and fitness apps and wearables today is for goal tracking. We want to be there with an additive message when they achieve that goal and give them something of value. We will launch a platform to do that in the New Year with our Life+ partner MapMyFitness. So, we are leveraging movement and activity to provide addictive experiences and rewards to consumers who achieve milestones in fitness and on-site activity.

Location is key. We are in essence all real-world versions of web traffic, and to seamlessly deliver a message via a push notification based on past location history and connected devices becomes more scalable. Based on historical activity and location, we can deliver appropriate messages to consumers based on intent. For example, my app will track how far I have run in my current shoes. When I walk into a department store, a relevant message can be pushed to my device highlighting the benefits of new shoes and tips to be healthy and hydrated all the time. The aisle you are in is connected to the experience you have had on the outside and day-to-day life.

Rob Griffin, EVP, global head of digital, Havas Media

It depends on the type of data and what you are trying to achieve. First off, you have to remember that wearables have input and output devices that generate and send/receive data. Depending on the brand, the campaign and the device the consumer is using, the data could vary from activating on the consumer inputting data into the device like a Fitbit or activating off of output data like an alert on an LG watch.

Overall, I find wearables very exciting and see a huge upside even though the advertising opportunity is small and often unsalable at the moment. This is due to relevance for the brand in current practicality as well as fragmentation of technology and usage. But I expect this to change fast given wearables’ potential to augment reality and add real value. As the technologies involved standardize and improved use cases emerge, I expect more and more advertising opportunities to arise. The big question remains: [W]hat degree of intrusion will the consumer tolerate?